Paytm to hive off original wallet biz into separate app

In a bold move, the country's largest mobile wallet Paytm will hive off its bread-and-butter payments business as a separate app, with the current app focusing on shopping.Anand J | TNN | November 04, 2015, 08:42 IST

The main app, which will morph into an e-commerce app, will continue to offer the wallet option for some time, but will prompt users to download the independent app for wallet use cases.BENGALURU: In a bold move, the country's largest mobile wallet Paytm will hive off its bread-and-butter payments business as a separate app, with the current app focusing on shopping. This will put the Alibaba-backed Paytm in direct confrontation with the deep-pocketed dedicated e-commerce players including Flipkart, Amazon and Snapdeal.

Founder Vijay Shekhar Sharma said the payments market (Paytm has more than 100 million registered customers) has reached the long-tail of Indian consumers, where the app requirements are different from that which urban English speaking customers needed.

The main app, which will morph into an e-commerce app, will continue to offer the wallet option for some time, but will prompt users to download the independent app for wallet use cases. The company is running pilots now and will launch the second app in January.

Facebook did a similar thing with its Messenger app, and while there was resistance, the move was successful with most users downloading Messenger. But can Paytm do it successfully? The risk is higher because unlike Facebook Messenger, which is only a small part of FB, the wallets business of Paytm is huge.

Sharma is confident. "Paytm is the default payments app for many and its use case needs to be simplified even as we as a company expand our horizon by adding commerce. By this method, we can make both users happy," he said.

Paytm's increasing commerce business that includes goods, bus tickets, hotel bookings and more, have made the app heavy and the co-existence with payments has complicated the payments use case, Sharma added. He felt that many rural customers will be put off by a heavier app and it makes sense to give them a simple light app for payments.

There are others in India who now have multiple apps, but the newer apps have invariably been for newer nascent businesses. Flipkart just launched a separate app for grocery purchases called Flipkart Nearby. Ola has a different app for food delivery. Zomato's food delivery app is called Zomato Order. Following the acquisition of Freecharge, Snapdeal has a separate wallet app.

Ashish Jhalani of Etailing India, an e-commerce consultancy, said that it is a prudent decision. "The apps are getting heavier and slower. What if consumers don't want most of the new features. Downloading a new app is not a big deal now. This is customization according to customer requirements," he added. At the time of downloading, most apps are light, but the cache data keeps on adding to the size, unless the user periodically deletes the data manually.

Paytm has entered e-commerce as the payments business based on commission is a low margin business. The commerce business, started a little over a year ago, now contributes 40% of the company's revenue. The company expects commerce to be 60% in another 12 months.

Alibaba, which has pumped in more than $600 million into Paytm in less than a year, follows a similar model - its Alipay app takes care of payments, while the Tmall app does the commerce business.

However, BigBasket co-founder Hari Menon thinks a multiple-app strategy may backfire. BigBasket gave up the idea of going that way for their business of showcasing recipes and associated product offerings. "People want to make things easier in life and multiple apps and notifications from more apps will create resistance," he said.